Dublin cafes may close in Campbell Bewley review

The Campbell Bewley Group is reviewing its cafe operations in the Irish market and unprofitable cafes may be closed, according to group chairman Mr Patrick Campbell. Announcing two new acquisition in Britain and in Northern Ireland and results for 1998, he warned that in the current year the group plans to rationalise and improve the performance of its cafe division. This could lead to the closure of some of the group's Dublin cafes, he said. Group pre-tax profits rose by only 6.5 per cent to £3.3 million (€4.19 million) for 1998, despite a 50 per cent jump in sales to £150 million (€190.46 million). Mr Campbell said the closure for refurbishment of its high-margin Grafton Street cafe for 22 weeks hit profit growth last year. Bewley Campbell has announced two acquisitions - Arabica Coffee, a British vending supply company based in London, and Top Chef, a contract catering company in Northern Ireland. No prices were disclosed but it is estimated that the acquisitions cost £5 million to £6 million which will be funded out of existing borrowing facilities.

Mr Campbell said Top Chef was a strategic acquisition which adds seven "blue chip" catering contracts and an annual turnover of £1.2 million sterling (€1.83 million) to the group's 12 contracts in Northern Ireland and gives it an entry into the industrial catering market there.

Arabica, with an annual turnover of £4.5 million sterling, is a good fit with both the group's beverage and catering businesses, he said. Both companies were profitable. The group will continue to look for suitable acquisition opportunities in Britain and in the US, but in the Irish market it intends to rationalise its cafe division. The division comprises 20 cafes and franchises in Ireland, 10 in Britain and 13 in the US. In the Irish market, difficulties in recruiting staff, rising wages and local authority rates are putting pressure on margins, he said.

Campbell Bewley is reviewing the performance of all its Irish cafes on profitability criteria and the performance of the franchise operations on standards criteria. "We are reviewing whether we should remain in certain locations," he said. He declined to be drawn on how many closures were anticipated, but confirmed that the group is spending £0.75 million on a refurbishment of its Westmoreland Street cafe.

Campbell Bewley operates in three divisions - catering, cafes and beverages. The 1998 results show sales at Campbell Catering rose by 56 per cent, while sales at the Bewley cafes' division rose by 72 per cent and the beverages division produced a 5 per cent increase in turnover. The £5 million refurbishment of the Grafton Street cafe was completed in October, with the investment expected "to pay off" this year and in future years. In Britain, the group produced organic growth, as well as growth through the acquisition of Hunters Catering Partnership in the south of England. In the US the Boston-based Rebecca's chain produced strong revenue growth and the group plans to add more cafes to the chain this year.

The selection process to replace Mr Michael Cummins, who resigned as chief executive recently, is under way, Mr Campbell said. Mr Campbell is currently acting as executive chairman.

On speculation about the possible flotation of the group, he said this was "just one option the company would look at if the time was right